By Yusuke Fukuhara / Yomiuri Shimbun Staff Writer
One year after its landmark acquisition of United States Steel Corp., Nippon Steel Corp. is now planning to expand its overseas business, as the shrinkage of the Japanese market appears inevitable.
The Japanese steelmaker is now proceeding with the renewal and enhancement of aging facilities and equipment, as well as streamlining production. The company intends to move into the black this fiscal year ending March 2027.
Nippon Steel plans to grow its business by capturing demand for such products as high-grade steel materials, in which the company holds a competitive advantage, in four key areas -- the United States, Europe, India and Southeast Asia.
"The U.S. market has expanded since we were evaluating the acquisition (of U.S. Steel,)" said Takahiro Mori, vice chairman of Nippon Steel, who served as the lead negotiator for the 14.1-billion-dollar deal, to reporters.
Steel demand in the United States is robust, particularly for high-grade steel used for automobiles and other products. Nippon Steel regards the country as a market where it can increase sales of products that utilize its advanced technologies, such as electrical steel sheets used in the motors of electric vehicles.
For the fiscal year ended March 2026, U.S. Steel posted a loss of 5.6 billion yen in business income, excluding inventory valuation fluctuations. However, the company expects to turn this loss into a 100-billion-yen profit for the fiscal year ending March 2027. "We can even expect results to exceed expectations," Mori said.
At the time of acquisition, Nippon Steel pledged to the U.S. government to invest about 11 billion dollar in U.S. Steel. Plans for about 3.2 billion dollars of the total investment have been detailed, which will be spent on upgrading blast furnaces and expanding production facilities for high-grade steel used in automotive manufacturing. Nippon Steel will also construct production facilities for raw materials used in electric arc furnaces, which contribute to decarbonization.
U.S. Steel faces the unresolved issue of low yield rates -- where the percentage of usable products is low relative to the input of raw materials. Nippon Steel has dispatched about 100 personnel, primarily engineers, to U.S. Steel, aiming to accelerate improvements in production efficiency.
Growing presence of India, Europe, Southeast Asia
According to Mori, Nippon Steel "has no choice but to seek growth overseas."
Japan produced 80.32 million metric tons of crude steel in fiscal 2025, which ended March 2026, the lowest level since fiscal 1968. Since market expansion is largely not expected, Nippon Steel plans to focus on enhancing cost competitiveness and advancing technological research in Japan.
On the other hand, Nippon Steel plans to strengthen its overseas markets. "We will transform into a company where overseas production accounts for the majority of production," Mori said.
The company designates United States, India, Europe and Southeast Asia as key regions. In India, where economic growth continues, Nippon Steel plans to build a new steel plant. It will be the company's first new steel plant in about half a century -- since the steel plant in Oita Prefecture, where a blast furnace began operations in 1972. With the new plant, Nippon Steel will become capable of providing a wide array of products, ranging from standard items to high-grade steel materials, helping the company expand its market share in the country.
Demand is growing in Eastern Europe. In October, Nippon Steel will assume direct ownership of a steelworks in Slovakia currently owned by U.S. Steel. This marks Nippon Steel's first European steel plant equipped with a blast furnace, establishing a localized system to supply high-grade steel.
China's overproduction casts dark shadow
Nippon Steel faces one primary concern -- the overcapacity of China, whose crude steel output accounts for half of the world's total at about 1 billion metric tons per year.
Chinese companies have exported surplus steel at low prices when domestic demand declined, thereby worsening market conditions. Amid sluggish domestic demand, China's steel exports reached 119.02 million metric tons in 2025, up 7.5% from the previous year, setting a record for the first time in a decade.
China accounts for about 70% of the steel imported by Middle Eastern nations, supplying about 20 million metric tons annually. If China redirects steel that has lost its regional buyers due to the Middle East conflict into other regions, global market conditions will worsen further.
Harunobu Goro, an analyst at UBS Securities Japan Co., analyzed Nippon Steel's global strategy, saying: "It is important to become a manufacturer rooted in each region to capture local demand. Strengthening sales capabilities is essential."
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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June 18, 2026 05:35 ET (09:35 GMT)
Copyright (c) 2026 The Yomiuri Shimbun
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